News and Press Releases

Airline Maintenance Company Owner Arrested for Running Fraudulent Schemes

July 15, 2008

Earlier this morning MICHAEL GRASSO was arraigned for his role in conspiring to defraud the Port Authority of New York and New Jersey by failing to pay permit fees for work his companies performed at John F. Kennedy Airport, LaGuardia Airport, and Newark International Airport. The defendant’s initial appearance was held before United States Magistrate Judge Marilyn D. Go at the U.S. Courthouse, 225 Cadman Plaza East, Brooklyn, New York.1

The charges were announced by Benton J. Campbell, United States Attorney for the Eastern District of New York, Mark J. Mershon, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Division, and Robert E. Van Etten, Inspector General, Port Authority of New York and New Jersey.

According to the indictment, GRASSO was the owner of the now-defunct companies AOG Maintenance, Inc. and AOG Sheetmetal, Inc. Both companies performed repair work on aircraft for several airlines and conducted business at JFK, LaGuardia, and Newark Airports. The Port Authority required companies conducting business at its airports to obtain a separate privilege permit to work at each of the airports, and to pay to the Port Authority a monthly fee of 5% of the companies’ gross receipts. The thirty-eight count indictment alleges that GRASSO and others conspired to defraud the Port Authority and several airlines by failing to remit the permit fees owed by AOG Sheetmetal, notwithstanding the fact that AOG Sheetmetal added the amount of the fees to its bills to the airlines and the airlines paid these fees to AOG Sheetmetal. The indictment also charges that GRASSO underpaid the fees owed to the Port Authority on behalf of AOG Maintenance by falsifying business records to indicate that work had been performed by AOG Maintenance at non-Port Authority facilities.

In addition, the indictment alleges that Grasso directed a cash kickback scheme in which he and another individual paid cash to an airline employee so that the employee would direct business to AOG Maintenance and AOG Sheetmetal for repair work on the airline’s aircraft.

“We will aggressively investigate fraud directed at agencies such as the Port Authority upon which the public relies so heavily for its transportation needs,” stated United States Attorney Campbell.

FBI Assistant Director-in-Charge Mershon stated, “By billing airlines for fees owed to the Port Authority and failing to remit those fees, Grasso defrauded both private sector businesses and the public. Unjust enrichment alone is of concern to the FBI. Defrauding a public authority merely ups the ante for us.”

Port Authority Inspector General Van Etten stated, “I want to thank the United States Attorney for prosecuting this case. There are numerous businesses, like AOG, operating at all of our various facilities and they are required, by agreement, to remit a percentage of their receipts to the Port Authority. This revenue is what allows the Port Authority to remain self-sufficient and free of any tax dollars.”

If convicted, the defendant faces a maximum sentence of 20 years’ imprisonment and a $25,000 fine.

The government’s case is being prosecuted by Assistant United States Attorney Martin Coffey.

The Defendant:

Age: 56



1The charges in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty.

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